Displaying items by tag: Philippines

Philippines: Republic Cement & Building Materials has approved a five-year capital expenditure programme to increase its clinker and cement production capacity to meet local demand. One of the cement producer’s owners, Aboitiz Group, announced that it was making the investment to take advantage of infrastructure development plants by the Duterte administration, according to the Philippines Star newspaper. The upgrade is expected to increase the company’s production capacity by 1Mt/yr from its current level of 7Mt/yr. The investment will be spent on both production efficiency improvements at existing plants and by building a new kiln.

Philippines: Two cement importers have asked the Regional Trial Court of Makati to issue a temporary restraining order against a Department of Trade and Industry (DTI) order restricting imports of cement. Fortem Cement and Cohaco Merchandising and Development allege that the Administrative Order 17-02 prevents imports of cement into the country, with the exception of importers operating integrated cement plants, according to the Manilla Bulletin newspaper. The importers say that the legislation will destroy their business. They also allege that the new rules violate anti-competition rules.

The DTI has defended its legislation, although it recognises the freedom of the importers to challenge it through the legal process. The government department says it issued the revised order to help safeguard the safety of consumers by requiring the strict conduct of standards compliance tests on cement imports. The order requires the application of the Philippine Standards licenses on foreign producers of cement imports, Import Commodity Clearance on cement imports and a minimum capitalisation level for importers to prevent smaller importers.

The Philippines has been messing up the balance sheets of cement producers so far in 2017. Over the last week Holcim Philippines, CRH and Cemex have each reported lacklustre first quarter results dragged down by poor performance in the country. CRH’s chief executive officer Albert Manifold seemed to receive the worst kicking when analysts in a conference call refused to let it pass that the company’s sales had dropped by 12% year-on-year in Asia. Although to be fair to him the group’s Asian division only represented 2% of global sales at Euro0.5bn…

CRH’s quarterly financial reports tend to be in the form of sparse trading updates. So this lack of detail and CRH’s plans to invest over Euro300m in the market may have prompted Manifold’s grilling. According to the Irish Times he blamed the situation on cheap imports from south-east Asia pulling down the price. He then defended the investment on the grounds that local producers would have an advantage as they increase production capacity due to constant production and ‘guaranteed’ regulation and certification.

CRH isn’t the only organisation that has been burned by the Philippines. Before Christmas this column was praising the local industry for being in a boom. Cement sales had risen by 10.1% year-on-year to 20.1Mt according to CEMAP data in the first nine months of 2016 and the Duterte Infrastructure Plan was starting to target hundreds of billions of US dollars towards infrastructure spending. In the end cement sales rose by 6.6% to 26Mt for the full year in 2016 and this was a solid performance despite being brought down by the fourth quarter.

From the cement producers mentioned above, Cemex reported that its Ordinary Portland Cement sales volumes fell by 9% in the first quarter. It blamed the fall on bad weather and a tough quarter to compare against in 2015. Holcim Philippines said that its net sales fell by 12% to US$176m and it attributed it to lower public infrastructure spending, tighter industry competition and higher production expenses. Eagle Cement meanwhile, the fourth of the country’s major producers, is preparing to float on the local stock market in May 2017 to fund an expansion drive. The poor results of the other three cement producers may dent its proceeds from the initial public offering (IPO).

The words CRH’s Albert Manifold used in his defence were that, “Brand matters over there.” Funnily enough the other big Philippines cement industry news story that has been rumbling away for the last few months is an investigation by the Philippine Competition Commission (PCC) into the conduct of the Cement Manufacturers Association of the Philippines (CEMAP) and some of the leading cement producers. Naturally this includes CRH’s joint venture Republic Cement. The enquiry was prompted in mid-2016 by the accusation of anti-competitive agreements by a former trade official. He also made direct allegations against Ernesto Ordonez, the head of CEMAP. The investigation is on-going and perhaps it will find out exactly how much ‘brand matters’ in the Philippines.

Philippines: Holcim Philippines has blamed lower public infrastructure spending, tighter industry competition and higher production expenses for a drop in its financial performance in the first quarter of 2017. Its net sales fell by 12% year-on-year to US$176m and its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 32% to US$40m. The subsidiary of LafargeHolcim also attributed its problems to rising fuel costs and a declining local currency. It estimates that cement demand in the country fell in the quarter year-on-year due to higher infrastructure spending in the lead-up to the election in 2016.

“Infrastructure and innovation are cited as pillars for the country’s 2017 productivity growth forecast at 6.4% gross domestic product (GDP) growth. These pillars are strengths of Holcim Philippines that we believe will buoy the company and make a big difference for customers. This region has been showing strong growth, giving us the optimism to continue to transform and serve our customers even better,” said chief operating officer Sapna Sood in a bullish mood.

Philippines: Albert Manifold, the chief executive officer of CRH, has defended his company’s investment of up to Euro350m in the Philippines despite reporting a 12% drop in sales in the first quarter of 2017. Under questioning from analysts in a conference call admitted that about a quarter of cement demand in the country is currently being served by imports from Southeast Asia that is also reducing local prices, according to the Irish Times. However, he insisted that local producers, including CRH, will have an advantage as they increase production capacity due to constant production and ‘guaranteed’ regulation and certification. Manifold also conceded that his company’s performance in the Philippines illustrates the ‘volatility of emerging markets.’

Philippines: Eagle Cement hopes to open the third production line at its Bulacan cement plant by 2018. The new line will keep the cement producer on track to lead locally in terms of cement production capacity by 2020, according to the BusinessWorld newspaper. The new line will add 2Mt/yr to the plant’s capacity, increasing it to 7.1Mt/yr. Funding for the new line has been completed. Eagle Cement is also planning to start building a new plant at Cebu by the end of 2017. This plant is scheduled to start production in 2020.

Philippines: Arsenio Balisacan, the chairman of the Philippine Competition Commission (PCC), says that the commission has 90 days in which to conduct an investigation into the local cement industry. It is expected to complete its probe in the first half of 2017, according to the Manila Bulletin newspaper. The investigation period follows the point at which the PCC found reasonable grounds of alleged violations of competitive practice. Potential fines the local industry could face are US$2m for a first offence and US$5m for a second.

The PCC announced in early March 2017 that was preparing to investigate the cement sector for alleged violations of competitive practice following a legal statement by Victorio Dimagiba, the head of Laban Konsyumer – a consumer rights organisation, accusing the Cement Manufacturers Association of the Philippines (CEMAP), LafargeHolcim Philippines and Republic Cement and Building Materials of engaging in anti-competitive agreements.

Philippines: APO Cement Corporation, a subsidiary of Cemex Philippines, has ordered a 4.5MW waste heat recovery unit from China’s Sinoma Energy Conservation. Sinoma will build and operate it. The new unit is expected to reduce the negative effects of power cuts, save energy costs and reduce the cement plant’s carbon emissions. No delivery date or cost of the order has been disclosed.

Philippines: The Mines and Geosciences Bureau (MGB) has reduced the permit requirements for cement producers and other mineral extractors. Following orders by President Rodrigo Duterte to reduce red tape and redundancy in government the bureau says that cement producers and contractors holding quarry and industrial sand and gravel (ISG) permits are no longer required to secure mineral processing permits (MPP). The change is effective immediately. It has also clarified that the actual production of cement is covered already under the manufacturing sector and does not require an MPP. The MGB added that it is reviewing other existing policies on mining tenement requirements.

Philippines: The Cement Manufacturers Association of the Philippines (CEMAP) has asked that the local industry be treated fairly in an investigation by the Philippine Competition Commission (PCC). In a press statement, Ernesto M Ordoñez, President of CEMAP said that his association had not been notified or given a copy of a compliant filed by a legal firm, according to the Manila Bulletin. He added that the association’s lawyers had previously tried to find out more about the complaint in late January 2017 but had not had a reply.

"Fairness requires that both sides are heard. Not only were we not given a chance to be heard. More than a month after our letter to PCC asking for what the complaint is about so we could give our side, we still have no reply from PCC. We just found out about the nature of the complaint through the newspapers. This is one-sided and unfair, specially considering the track records of the subjects of the complaint," said Ordoñez.

The PCC announced in early March 2017 that was preparing to investigate the cement industry for alleged violations of competitive practice following a legal statement by Victorio Dimagiba, a former trade undersecretary, in August 2016 accusing CEMAP, LafargeHolcim Philippines and Republic Cement and Building Materials of engaging in anti-competitive agreements.